CAN TECHNOLOGY TRANSFORM THE CLIMATE DEBATE?

REMARKS BY EILEEN CLAUSSEN, PRESIDENT, PEW CENTER ON GLOBAL CLIMATE CHANGE

EXXONMOBIL LONGER RANGE RESEARCH MEETING, MAY 16, 2007

PAULSBORO, NEW JERSEY

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And so this is where the question I really wanted to answer comes in. We need mandatory policies that will light a fire under what’s happening now to address this issue, policies that will take us to another level of action and commitment. We need policies that will slow, stop and reverse our emissions, policies that send a clear signal that reducing greenhouse gas emissions will be rewarded in the marketplace. And we need policies that will speed up the process by which new low-carbon technologies are developed and deployed.

Now, I am sure that many of you are thinking this all sounds wonderful and good. But what are the chances of these kinds of policies actually making it into law? And, if you are skeptical, I understand. Under Democratic and Republican leaders alike, our nation has not exactly had a record of strong action on this issue.

But times have changed. I believe we have reached both a turning point and a tipping point in the policy debate on this issue. The turning point has come in large part from the science—people now accept that this is an open-and-shut case. They accept that we have a very serious problem on our hands, and they’re ready to consider solutions.

The turning point also has come from the actions of state leaders on this issue. Businesses are not the only ones who are stepping up to the climate problem and trying to shape solutions. At the state level, governors and other officials are taking action on their own, they’re starting to explore what works to reduce emissions, and they are showing that it’s politically possible to do this: you can adopt serious policies to reduce emissions without putting yourself at grave political risk, and without throwing down roadblocks to continued economic growth.

Consider just a few examples of what states are doing. In February, the governors of California and four other western states joined forces to set a regional target for greenhouse gas emissions. By August 2008, the states will establish a market-based system to enable companies and industries to meet the target as cost-effectively as possible.

In addition to the western governors’ agreement, there is the agreement among 10 Northeastern and Mid-Atlantic states (including New Jersey) to create their own emissions trading system. Known as RGGI, it is aimed at reducing carbon dioxide emissions from power plants in the region.

In addition to joining together in these regional efforts, states are acting on their own to reduce emissions. To date, 14 U.S. states have adopted their own statewide targets for capping and, ultimately, reducing their greenhouse gas emissions. The District of Columbia and twenty-three states, including large emitters like Texas and California, have required that electric utilities generate a specified amount of electricity from renewable sources. And there are countless other things states are doing.

And then there is California. Not content with establishing an ambitious set of greenhouse gas emissions targets—such as 1990 levels by 2020—California has gone the next step and passed legislation, with real enforcement, to give the targets the force of law. California also has taken steps to begin regulating carbon dioxide emissions from cars and trucks.

So this is a major turning point: California and all of these other states actually are doing something to protect the climate. Under Republican and Democratic leaders alike, they are embracing real action to reduce emissions—not because it’s the politically fashionable thing to do but because, like the business leaders I have talked about, they understand the risks. And they also see the opportunities for their states. By embracing renewable fuels and other technologies, states are carving out a niche for themselves in the new-energy economy of the 21^st century.

So if that’s the turning point, then what’s the tipping point? Well, the tipping point, I believe, happened earlier this year. That’s when several members of our Business Environmental Leadership Council joined with the Pew Center and others in a high-profile appeal for U.S. government action to address climate change. The group is known as the U.S. Climate Action Partnership (USCAP for short), and this wasn’t just a PR move. Rather, the USCAP group issued a specific cap-and-trade proposal with specific targets and timetables—a real plan of action to slow, stop and reverse U.S. emissions. In addition to cap and trade, the USCAP group embraced an array of other policies aimed at building a low-carbon energy economy.

As of last week, the USCAP group includes 26 members, including major businesses, from General Motors and Dow Chemical to Alcoa, GE and PG&E; and major NGOs, including not only the Pew Center but also the Natural Resources Defense Council, the National Wildlife Federation and others. The company partners have total revenues of $1.7 trillion and a collective workforce of more than 2 million in every U.S. state. And the reason I say this is a tipping point is because this unique, nonpartisan collaboration has sent a clear message to lawmakers—and that message is this: America needs national policies to address the climate problem, and we need them ASAP.

But don’t just take my word that this is a tipping point. Others are saying so as well. At a hearing in February, Senator John Warner of Virginia, who sits on the Environment and Public Works Committee, paid tribute to USCAP's role in helping to bring the issue of climate change into what he referred to as the “big leagues.” He added, "When I see such an extraordinary cross-section of America's free-enterprise system, together with the environmental groups, come and form a group like this, you've got my attention.”

What types of policies does USCAP recommend? First and foremost, we are urging our nation’s leaders to enact policies for mandatory reductions of greenhouse gas emissions from major emitting sectors. That includes large stationary sources such as power plants, as well as transportation and energy use in commercial and residential buildings. The cornerstone of this economy-wide approach would be a cap-and-trade program.

Cap-and-trade, as you know, is a policy that requires emissions reductions while allowing companies to trade emission credits. The most important benefit of this approach: it provides a price signal for greenhouse gases. This price signal, in turn, will stimulate investment and innovation in the new technologies we need.

The USCAP partners recommend that Congress adopt specific short- and mid-term emission reduction targets for our nation. Within five years after what we refer to as the “rapid enactment” of mandatory legislation, USCAP says emission levels should be at 100 to 105 percent of where they are today. After ten years, they should be at 90 to 100 percent. After 15 years, the target would be 70 to 90 percent of today’s emissions.

USCAP also recommends a “target zone,” or aspirational goal, that is 20 to 40 percent of today’s emission levels by 2050. In other words, by 2050, we believe greenhouse gas emissions levels should be cut by 60 to 80 percent from where they are today.

Now remember who is saying this—together with the Pew Center and the other NGO partners, these are some of the largest companies in the world, companies that are major sources of greenhouse gas emissions. And the report that this coalition produced together was just the start of it. All of the partners in this coalition are committed to working together to turn their recommendations into legislative reality.

Although there have been business-NGO coalitions on environmental issues before, none to date has had the impact on key audiences—policymakers, the public, and other business people—that USCAP appears to be having, based what's we’ve seen over the past few weeks. We have shown Congress that there is a consensus emerging in the business community that the time is right for federal climate legislation. While there are still voices opposed to reasonable action, it is increasingly clear that these opponents are out of step and out of touch.

So just in the last few months, we have seen both turning points and a major tipping point in the climate debate. And together with the change in power on Capitol Hill last year (which could be considered another tipping point), these developments have brought Congress much closer to real action to begin to rein in U.S. emissions.

Already this year, there have been more than 65 hearings on the climate issue on Capitol Hill—serious, substantive hearings convened to help members of Congress draft mandatory climate legislation. And 106 bills that either directly concern or mention climate change have been introduced. The leadership of the House has made it clear that they want to pass legislation as soon as possible. And the Speaker of the House and the Senate Majority Leader have both said that, after Iraq, climate change is their first priority.

And there is additional political pressure for solutions due to the 2008 Presidential contest. On the Democratic side, you have a number of candidates who have pledged to make climate change an important part of their platforms. Among the Republicans, there is U.S. Senator John McCain, who co-wrote the first cap-and-trade bill in the U.S. Congress way back in 2003.

Given the changing politics on this issue, it is plausible that the United States could have a mandatory climate policy in place by 2008, and it’s likely we will have such a policy by 2010.

But, again, a mandatory cap-and-trade policy, no matter how ambitious or how broad its scope, is not the only policy we need. In the same way that there is no single technology fix to the climate problem, there is no single policy fix either. We need technology and research incentives. We need policies to ensure that we can adapt to the level of climate change that is already built into the atmospheric system. We need specific policies aimed at specific sectors of the economy, from transportation and energy to agriculture. And we also need to join all these other policies with a commitment to re-engage in the international negotiations on this issue.

Climate change, as we all know, is a global problem—and, therefore, it requires global action. Even if we were to embrace the most aggressive program imaginable to reduce the United States’ contribution to climate change, global energy use will continue to surge and climate change will remain a significant threat. We cannot protect the climate without a global framework that enlists all countries to do their part to reduce emissions, and that provides poorer countries with the support they need to do so.

All of you know about the Kyoto Protocol. This is the international agreement that sets specific targets for developed countries to reduce their greenhouse emissions by the year 2012. President Bush rejected Kyoto early in his first Administration—and so the United States is not a part of it. Australia also opted out. And, without those two countries, the Protocol covers only about one-third of global emissions. What’s more, even if all the countries that are part of Kyoto meet their targets, which is unlikely, global emissions in 2012 will still be 30 percent higher than they were when the Kyoto Protocol was signed in 1997. Clearly, that’s not good enough.

International talks have begun on what to do after 2012, when Kyoto’s current targets expire. And there is only one way forward in my view: the United States is going to have to drop its go-it-alone attitude and be a part of these discussions. Because if the world’s largest emitter were to step up and say we are ready to make a deal, then China and other emerging economies might also be willing to enter the negotiations in a substantive way. And we could potentially see an agreement that committed all major economies to action.

At the Pew Center, we’ve done a great deal of work on how to structure an international climate agreement that is fair and effective and politically palatable for everyone. And we believe you can do this in a way where everyone has binding commitments. They’re not necessarily the same type of commitments, but they are commitments. And they ensure that everyone is a part of the solution, including developing and developed countries alike.

Again, this is not solely the view of the Pew Center. The members of the USCAP also agreed that the United States has to make international engagement on this issue a priority. And the companies that are part of the Pew Center’s Business Environmental Leadership Council have always said that the U.S. must lead the global climate fight.

I want to close today by asking my opening question again: Can technology transform the climate debate? I believe that it already has. As I said, we have seen some progress in developing some of the key technologies—enough progress, in fact, to convince policymakers and others that there are solutions out there, that this is do-able but only if we ramp things up in a big way. And I hope I have offered some clues about how the climate debate (and climate policy) have the potential to transform technology as well.

I hope that I have also left you with a better sense of the passion for solutions and the level of commitment I am seeing among business leaders today with respect to climate change. The companies we are working with at the Pew Center believe very strongly that, given the risks and the opportunities, it is in their interest—and in our nation’s interest as well—to act on this issue in serious and substantive ways. And these business leaders now have a seat at the table as Congress is shaping solutions.

A few years back, one of our nation’s top leaders said this when he was asked about U.S. action on climate change: he said that those who think they are vying for a seat at the table are mistaken – because there is no table. He was saying there was no place to discuss what we needed to do about this issue because, in his view, nothing needed to be discussed.

Well, there is certainly a table now. And not only does this table exist, but today we are bringing in many more chairs and making the table even bigger as more and more business leaders gather round. I will say it again: we have reached a tipping point—and we’ve seen some remarkable turning points as well. And what they’re all pointing to are real changes in both policy and technology.

Again, I thank all of you for the important work you are doing to find solutions to the climate problem. And I encourage all of you to pull up a chair as the debate continues. This is a table where there is always room for more.

Thank you very much.